Japanese investments are transforming Vietnam’s energy sector, especially driving growth in renewable energy. With rising energy demand, Vietnam faces critical challenges, but strategic initiatives and well-established relationship with Japan offer promising solutions. Thus, the energy sector is set for transformation, with both infrastructure and sustainable energy development at the forefront.

Investment Moves from Japan to Vietnam in Recent Years

Japan continues to be a key strategic partner for Vietnam across various sectors. In 2023 alone, newly registered FDI from Japan reached nearly 7 billion USD, making it the second-largest investor, after Singapore[1]. As of 2021, Japan’s cumulative investment in Vietnam totaled nearly 63 billion USD. In particular, the energy sector accounting for approximately 7 billion USD, ranked second in the investment value after manufacturing and processing industries being the primary focus[2].

FDI from Japan to Vietnam by sector in 2021[3]

Unit: 100% = 62.9 billion USD

원천: Consulate General of Vietnam in Osaka

Vietnam’s energy generation by type of power from 2020 – 2024

Source: Vietnam Energy Association

Overall, the energy sector in Vietnam shows positive signs of growth. As of 2024, Vietnam generates 84,360 MW of energy, reflecting a CAGR of 5% from 2020 to 2024. Fossil fuels remain the largest energy source, with coal contributing 33%, and oil and gas accounting for 10%. Renewable energy is closely followed, with wind and solar making up 27% of the total energy generated, while hydropower represents 28%. This distribution has remained relatively stable since 2020, but a significant shift is expected in the future as renewable energy continues to grow[4].

Japan Investment in Energy Sector

Alongside the growth trajectory of Vietnam’s energy sector, Japanese investments in the country’s energy sector have evolved significantly, both in terms of investment value and the types of energy. Previously, Japanese investment projects primarily focused on renewable energy, though some also involved fossil fuel projects, with few projects surpass 100 million USD. However, with the establishment of Power Development Plan 8 (PDP8) from the government in May 2023, Vietnam set forth aims to increase the share of renewable energy to over 50% by 2030 and nearly 70% by 2050[5]. Since then, there has been a huge shift in investment value from Japan, with projects reach 20 billion USD.

Some of Japan investment in energy sector before PDP8

출처: B&Company 편집

Some Invesment Project from Japan to Vietnam after PDP8

출처: B&Company 편집

Reason for Investment

In the context of Vietnam’s economy, every 1% growth in GDP results in a 1.5% increase in energy consumption. Therefore, according to the growth projections from the Ministry of Planning and Investment, electricity consumption in 2025 is expected to rise by 12% to 13%[6]. However, with an average electricity production growth rate of only 5%, the country is likely to face challenges in keeping up with the growing demand. As a result, starting from 2025, various initiatives have been introduced to support investors in the renewable energy market.

Government initiatives to support the energy sector

출처: 베트남 정부 포털

With strong government support and clearly defined development targets outlined in the Amended PDP8, Vietnam’s energy sector is expected to experience significant growth – particularly in the field of renewable energy, which continues to attract a growing number of both domestic and foreign investors.

Prospects and Challenges for Japanese Investors in Vietnam

Japanese investors have numerous opportunities to invest in Vietnam’s energy market, supported by several key advantages.

First, Japan is Vietnam’s largest provider of Official Development Assistance (ODA)[7] and a member of the Asia Zero Emission Community (AZEC)[8]. As a result, investment projects in the renewable energy sector are well-positioned to receive substantial support. Second, the year 2030 has been set as the target for completing Vietnam’s LNG energy projects. However, as of now, only 2 out of 16 projects have been completed, while the remaining ones are facing challenges in attracting investment. This presents a valuable opportunity for Japanese enterprises seeking to enter Vietnam’s energy market, particularly in the LNG sector[9]. Finally, according to a JETRO report on Japanese Companies operating overseas, out of 832 Japanese companies in Vietnam participated in the survey, 62% of respondents are valued Vietnam as a scaling market with a growth potential, in terms of investment environment[10].

However, despite these promising prospects, several challenges persist. The power purchase agreements (PPAs) can be complex and inconsistent. Many foreign investors have raised concerns about the lack of transparency and predictability in Vietnam’s legal and administrative procedures[11]. Additionally, the limitations of the national grid as of now – especially in regions with high renewable potential – have led to curtailment of solar and wind projects, affecting returns on investment[12].

결론

Japan’s investment in Vietnam’s energy sector reflects a strong commitment to sustainable development and energy security. While Vietnam offers significant opportunities in the renewable energy market, Japanese investors must navigate regulatory uncertainties, grid limitations, and financing challenges. By addressing these challenges, Japan and Vietnam can play a leading role in driving a cleaner and more resilient energy future in the region.

[1] General Statistics Office of Vietnam (2024). Newly Registered FDI in Vietnam in 2023 <입장>

[2]Consult General of Vietnam in Osaka (2021). Japan Investment to Vietnam <입장>

[3] Latest available data

[4] Vietnam Energy Online (2025). Overview of Vietnam Energy in 2024 <입장>

[5] Vietnam Government Portal (2023). Decision No. 500/QD-TTg: Approval of the National Power Development Plan for the 2021-2030 period, with a vision to 2050 <입장>

[6] VnBusiness (2024). Prospect for Vietnam Energy Consumption in 2025 <입장>

[7] Ministry of Planning and Investment of Vietnam (2024). Vietnam, Japan Review Mid-term Implementation of the Joint Initiative in the New Era <입장>

[8] Ministry of Economy Trade and Industry of Japan (2024). Members of Asia Zero Emission Community <입장>

[9] Ministry of Industry and Trade of Vietnam (2025). Amendment of Power Development Plans 8 (PDP8) <입장>

[10] Japan External Trade Organization (2024). 2024 Survey on Business Conditions of Japanese Companies Operating Overseas <입장>

[11] The Reuters (2025). Over $13 billion in solar, wind investment at risk in Vietnam <입장>

[12] Fulcrum (2024). The Unexpected Twist in Vietnam’s Renewable Energy Saga <입장>